President Nayib Bukele
President Nayib Bukele

San Salvador: The president of El Salvador has declared bitcoin “legal tender”, allowing it to be used as an official form of currency in the country. President Nayib Bukele is the first world leader to formally adopt bitcoin or any other decentralised cryptocurrency and emphasised his enthusiasm for the digital currency by adding “laser eyes” to his Twitter profile picture.

El Salvador is a largely cash economy, where roughly 70% of people do not have bank accounts or credit cards. Remittances, or the money sent home by migrants, account for more than 20% of El Salvador’s gross domestic product. Incumbent services can charge 10% or more in fees for those international transfers, which can sometimes take days to arrive and that sometimes require a physical pick-up.

The U.S. dollar is El Salvador's official currency. About one quarter of El Salvador's citizens live in the United States and last year, despite the pandemic, they sent home more than $6 billion in remittances. Bitcoin could be "the fastest growing way to transfer these remittances." A big chunk of those money transfers are currently lost to intermediaries and with advent of Bitcoin more than a million low-income families could benefit.

President Nayib Bukele, he 39-year-old president, who has maintained approval ratings above 90% and made Twitter his preferred way of communicating, characterized it as an idea that could help El Salvador move forward.

Most of the world's central banks are looking into the possibility of creating their own digital currencies alongside cash and bank deposits.

(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal